How To Remove A Repossession From Your Credit Report

Written By Jeff Hindenach
Last updated September 20, 2021

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September 17, 2021

Simple. Thrifty. Living.

When a person stops paying for a loan – whether it be auto, home or something else – the lender loses out on the funds and interest payments that are owed. In order to recoup those losses, the lender is liable to take action against the borrower. The most common next step is repossession, which is the process lenders take to formally reclaim an asset. This occurs after the borrower does not make their required payments multiple times. 

Repossession occurs most often with car loans. However, it also happens with other types of assets like furniture or boats. There are two types of repossession:

Voluntary: In this case, the borrower returns the asset to the lender in order to retain some control over the process.

Involuntary: The lender sends someone to physically take back the property without the borrower’s consent. This can happen at any time. 

Additionally, the borrower can still be held responsible for paying off the rest of the loan. Even after the repossession occurs. And, either way, the repossession will hurt the borrower’s credit score tremendously.

Repossessions can be removed from credit reports, especially if they were done unfairly. But, before you begin the process of trying to remove the repossession, know that it can take considerable effort to correct your credit report. 

There are three ways to remove a repossession from a credit report. Negotiating new payments with the lender, disputing the repossession, and getting a professional to remove the repossession outright. The option that will be best for you depends on your specific situation and you may need to try more than one strategy. Let’s dive into each of the three removal processes.


When your asset is at risk of being repossessed, one way to avoid it being a permanent negative mark on your credit report is to go to your original lender and negotiate new payment terms. If you are able to speak with someone who can make decisions about your policy, you can possibly strike up new payment terms in exchange for them not moving forward with the repossession. 

This is more affordable and convenient for your lender but you’ll have an uphill battle to fight in order to assure them that you will make the payments you agreed to. Once you have successfully negotiated it is important to get the terms in writing as well. Then, make a plan that will guarantee that you’ll be able to continuously make your payments on time.


If negotiating doesn’t work out or your property has already been repossessed, disputing the repossession may be your best bet. As a borrower, you will have to prove that the repossession reporting was inaccurate or unfair in some way. You’ll have to dispute the repossession with all three major credit bureaus – Experian, TransUnion and Equifax.

The steps to do this are as follows:

  • Review your credit report to look for any errors such as incorrect dates or amounts.
  • Make sure you have documented evidence that shows the information is false.
  • Report the issue to each credit bureau and they will investigate within 30 days.
  • If the lender is unable to dispute your evidence the removal will occur but if they can show that the report was fair and accurate it will remain.

While it’s possible that your dispute will be granted, it’s not a guarantee. Additionally, if one of the bureaus doesn’t respond to your letters, get in touch with the Federal Trade Commission.

Seek Help 

If you don’t want to undertake all of the work that comes with getting a repossession off of your credit report yourself, a credit repair company can help you successfully navigate this process. A credit repair company does all of the steps mentioned above, so they don’t do anything you couldn’t do yourself. Their expertise can be beneficial, however, because they have greater knowledge of the rules that dictate the space. 

That said, these services charge a monthly fee and are not guaranteed to work. 

The impact of a repossession depends entirely on your existing credit situation. It will most definitely have a negative effect on your report but to what extent is hard to predict. In some cases, however, it can be extremely detrimental.

How Many Points Does A Repossession Drop Your Credit Score?

Depending on the specific repossession and your existing credit history, your credit score can be docked 100 points or more in some instances. Additionally, while the repossession itself will be damaging, the multiple late payments leading up to it are too because your lenders will report those to credit bureaus as well. Furthermore, if your lender hired a collection agency, some debts may show up twice which only compounds the issues.

Is Voluntary Better?

Unfortunately, even if you voluntarily forfeit your assets, you will have the same financial outcome as you would if they were involuntarily repossessed because the basis of the issue is that you cannot pay what you promised. 

Voluntary repossessions, however, are typically less stressful as you can return the asset on your own terms as opposed to being surprised by it. This helps you preserve some level of control over the situation.

A repossession can stay on a credit report for seven years. Which can make it very difficult for you to qualify for other lines of credit during that time.

Do You Still Owe Money Afterward?

Yes, when a repossession occurs, the lender will oftentimes sell the property to recoup their loss on the loan. Since assets like cars depreciate quickly, selling them probably won’t cover the full amount in which case the lender will continue to come after the borrower for the remainder.

There is also no guarantee that paying off this amount will improve your credit score after repossession has occurred.

Can You Get A Loan Afterward?

Yes, you can still get a loan but the lenders who are willing to take the risk on you will likely impose very high interest rates and fees to hedge their bets. This, of course, can make it difficult to afford your payments which can land you in the same repossession cycle. An alternate short-term option is to cosign with someone who has good credit while a good long-term strategy is to improve your credit overall.

How Can You Improve Your Credit After?

The best way to do this is to make your payments on time, limit your credit utilization, and avoid opening too many new accounts in a short period of time. 

Communication and proactivity are key when it comes to avoiding or preventing a repo. If you are having trouble making your payments, speak to your lender about adjusting your plan. Being open and honest about your financial situation to your lender will most likely help you stay out of danger of losing your assets. As noted above, they will benefit more from you paying off your loan than from repossession, by being proactive, everyone wins.

About the Author

Jeff Hindenach

Jeff Hindenach is the co-founder of Simple. Thrifty. Living. He graduated from Bowling Green State University with a Bachelor's Degree in Journalism. He has a long history of financial journalism, with a background writing for newspapers such as the San Jose Mercury News and San Francisco Examiner, as well as writing on personal finance for The Huffington Post, New York Times, Business Insider, CNBC, Newsday and The Street. He believes in giving readers the tools they need to get out of debt.

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